Return to Transcripts main page

Quest Means Business

Trump Says Trade Wars are Good; Dow Struggles Amid Talk of Trade War; EU Leader Thank British Prime Minister for "Clarity"; Trump Promises Victory in Global Trade Wars; Euroskeptic Parties Hope for Victory in Italian Elections. Aired 4-5p ET

Aired March 02, 2018 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[16:00:00] RICHARD QUEST, CNN HOST: The closing bell is now ringing on Wall Street. Th Nasdaq is actually higher. The S&P is higher. The Dow

has erased most of the losses during the course of the day. So -- oh, now you've lulled us into a false sense, two little and one big, but the

trading is over. What a day it has been. It's Friday. It's the 2nd of March.

Tonight, Donald Trump tells the world trade wars are good. Now the rest of the world digs in for a fight.

The stocks markets are struggling to regain their composure. Heavy losses in the morning, recovery late in the day. And let's get on with it.

Theresa May sends a message to Brussels on Brexit. I'm Richard Quest live in the world's financial capital, New York City where I mean business.

Good evening. Trade wars are good and with those words, the battle lines are being drawn as Donald Trump plans for a global trade war. Tonight,

we're going to hear an exclusive interview with Mexico's economy minister. It's one of the U.S.'s biggest trading partners and would be seriously

affected by the potential tariffs on steel. We'll also hear from the former head of the WTO who says Mr. Trump is wrong to view trade as a zero-

sum gain.

The president had plenty to say today, telling the world that trade wars are good and tonight the rest of the world has started planning its

countermeasures. It started with a tweet that isn't even policy yet. This is the president's point.

He said, when a country, the USA, is losing many billions of dollars on trade with virtually every country it does business with, trade wars are

good and easy to win. He went on to suggest, not trading with countries would get cute with the United States.

In Europe there saying no one is win a trade war.

(BEGIN VIDEO CLIP)

BRUNO LE MAIRE, FRENCH ECONOMY AND FINANCE MINISTER (through translator): A trade war between Europe and the United States will only have losers.

The United States should know that if these unilateral decisions are confirmed they will call for a strong, coordinated and united response from

the European Union. All options are on the table. An appeal to the World Trade Organization or countermeasures to limit American imports in Europe.

(END VIDEO CLIP)

QUEST: It doesn't get much more blunt than that, from one side and the other, and so let me show you. Let's go to the war room and let me show

you the potential retaliatory weapons which even now are being planned if this trade war actually begins. Remind ourselves how it started. The

United States says it is looking to put tariffs on imported steel to the U.S. from across the globe. On the other side of this now we're hearing

from the other countries. The European Union, for example, they are considering tariffs that would go across the Atlantic eastbound on Levi

Jeans, Jim Beam Bourbon and even purely symbolically but just how significant Harley-Davidson motorcycles that would also get tariffs.

But there is more, when we look at how China would retaliate in this trade war, for instance, promising tariffs on U.S. soybeans and to make it truly

brutal, tech companies like intel and Apple could also feel the full effect. You're getting an idea now of how this turns truly global and very

nasty.

And then you have perhaps the heart of all of this, NAFTA, the North American Free Trade Agreement between Canada, the United States and Mexico.

Now Canada favors a more political approach.

[16:05:00] But remember, NAFTA is already in trouble in terms of its negotiations. So, put all of this together. NAFTA over in the Americas,

all these tariffs in Europe, China, Russia, India, even Australia saying they will all join in. This is how your trade war actually gets moving.

Let's talk to Paula Newton who is in Ottawa. Paula, NAFTA is obviously key to this, particularly, Paula, since Canada and Mexico are two of the

biggest exporters of steel to the United States.

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: In fact, and Canada is the largest. The largest in steel and aluminum. So, when you talk about a

trade war at this point it would seem that Donald Trump is taking direct aim at Canada and Mexico. But at this point in time, especially Canada had

been looking for an exemption. Remember, Donald Trump had at first invoked this as a security measure. Well, Canada is saying, look, this is about

national security, then we, the U.K. and Australia are in a category of military security. We are part of your defense infrastructure. You know,

Richard, I've rarely seen Prime Minister Justin Trudeau so blunt about something when it's come to really butting heads with the Donald Trump

administration and Donald Trump himself. I want you to listen now to what he said a few hours ago.

(BEGIN VIDEO CLIP)

JUSTIN TRUDEAU, CANADIAN PRIME MINISTER: I've highlighted that this is not something we wanted to see. And we will continue to engage with all level

if the American administration in the coming days so that they understand this proposal is unacceptable.

(END VIDEO CLIP)

NEWTON: You know, and even more than that. Richard, he went further and said, look, the United States should be clear that this is going to hit

them as much as it's going to hit Canada. You know, without that exemption, Canada says it is at the ready right now at this hour preparing

retaliation. They refused to say exactly what they might hit. But you know, you mentioned a few moments ago that it was political. Why? They

are being highly strategic and let's think to the midterms. Let's think to Donald Trump's reelection in 2020. We're talking swing states,

Pennsylvania, Ohio, Wisconsin, their top trading partner is Canada and that is where Canada will try and hit.

QUEST: But Paula, NAFTA's negotiations, the latest talks, another round is about to begin. Those talks, negotiations are just about on their last

legs.

NEWTON: You know, in fact, Canadian officials say that they had heard some optimistic tones from those negotiations in Mexico. That they were hopeful

that they were finally turning toward a constructive phase. You know what they told me, Richard? That look, nothing constructive is going be

possible if the Trump administration goes ahead with these kinds of tariffs on both aluminum and steel. And, Richard, as we've spoken on this program

so many times, it's that integrated supply train when it comes to things like the auto industry that is so hard to pull apart.

QUEST: Paula Newton in Ottawa. Keep watching on what the Canadians do on that, please. In a few moments from now I'll be speaking exclusively to

the third party in the NAFTA economy. Mexico's economic secretary will join me live on the program as we go through all of this.

Now, look, talk of this trade war continued to rile the markets. Join me in the trading post and you will see what I mean. So, we have -- I think

we have to have a green today. Definitely a green because although the Dow is down nearly a third of a percent, it had recovered from a 400-point loss

and you do have the S&P 500 turning positive. And you have a strong gain, look, a 1 percent gain from the Nasdaq which had been heavily down and

therefore the fangs will obviously be up also. So, the talk of trade which had taken this market down 400-odd, points turned around.

If we want to put this into some sort of history there've been warnings from history time and again over lurching into trade wars. For instance,

back in the 1930s, the most famous of all, U.S. Congress slapped tariffs on goods coming into the United States. It was known as the Smoot-Hawley Act.

At the time it was perceived to be the right economic medicine for a country in trouble. It was the exact killer medicine. Other countries

responded in kind and before long the great depression followed.

Then you have Canadian tariffs on U.S. eggs among the retaliatory measures. As a result, U.S. eggs exports were decimated. The trade war snowballed.

There were hundreds of tariffs that pushed food up across the board. It is widely -- look at this, and it was a famous post, I know three trades,

three languages, fought for three years, have three children and no work for three months and only want one job.

[16:10:00] This Smoot-Hawley activity largely regarded as the primary cause of the Great Depression. Pascal Lamy is a former director-general of the

World Trade Organization. He told me while this may not be a fully blown trade war yet, it will backfire on Donald Trump.

(BEGIN VIDEOTAPE)

PASCAL LAMY, FORMER DIRECTOR-GENERAL, WTO: It's serious, but I do not think we are on the verge of a real trade war. It's more than what the

U.S. administration has done so far in terms of implementing the protectionist agenda of Mr. Trump. And yet, I don't think it's a real

breakthrough. This was to be expected. By the way, it's still very unclear what other countries who are really targeted beyond China, in

Europe, in Northern America, unclear and it is a typical, old-fashioned protectionist measures.

It's not the first time the U.S. has imposed some sort of trade restrictions on steel. It's on the ground of national security which to

most of us is extremely overstretched. Why not potatoes or shoes, who matters also for soldiers. But we will see whether or not. this leads to

an overflow of steel that doesn't go to the U.S. and that would go elsewhere in which case, noted in Europe, countermeasures would be taken.

QUEST: But when you get the U.S. president threatening to -- promising tariffs on steel and Jean-Claude Juncker says Europe could hit back and

actually is specific. Harley-Davidson, bourbon, Levi's. These aren't esoteric threats. These are concrete products that are now in the firing

line.

LAMY: Yes, but I mean, again, Richard, let's take this notion of a trade war with a pinch of salt. The reality is that Mr. Trump wants to protect

more the U.S. steel industry which obviously is not very competitive, and this will lead to U.S. consumers and other industrial sectors paying more

for uncompetitive steel. At the end of the day nobody, at least on this side of the Atlantic believes it's a good thing for the U.S. It's a bad

thing, it will backfire as it did in the past. Remember last time the U.S. imposed a safeguard on steel, and I have a reason to remember that because

I was the EU trade commissioner at the time. They had to remove it because it impacted too much sectors like the car industry or the machinery

industry.

QUEST: So, let's get right to the bottom of this. When President Trump tweets trade wars are good and winning this one will be easy. Is that

helpful?

LAMY: My answer to that is no. But I don't think many people would care. Mr. Trump obviously believed that trade is a win-lose game like a war. You

win, I lose. I win, you lose. Most of the people on this planet do not believe that trade is a win-lose game. What binds people together on this

planet about trade, the reason why everybody agreed that under some conditions, more open trade is good is that it's a win-win game. It's not

a win-lose game and this is where I think he departs from a world consensus and from the way the modern economy is organized around this planet width

global value chains. So, going back to the middle ages, I think will not help, but if that's his view, let him try. We don't think it will work.

(END VIDEOTAPE)

QUEST: Pascal Lamy, former head of the WTO talking to me from Paris. An early morning tweet advocating a trade war. That seemed to rattle

investors. Not surprising, look at the way the day progressed though. I think that we need to have true context and perspective, the way the market

came back and if you look at the triple stack, of course, the S&P and the Nasdaq actually were higher. The manufacturing companies were the biggest

losers along the Dow from Chicago, look -- I am joined by Bob Iaccino, co- founder of Path Trading Partners. Very difficult, Bob, to make sense of what we saw today. I mean, we can analyze it in terms of momentum trading,

but if you are trying to look for a strategic direction, I think you may as well go home and go to the bar.

[16:15:00] BOB IACCINO, COFOUNDER, PATH TRADING PARTNERS: Yes, I would agree. I mean, I think the overwhelming sort of take from this and from

the rally toward the end of the day is that the market truly doesn't believe that this is going to become policy. It's very difficult to take

down the entire global economy, but if anything will do it it's going to be a trade war. I mean, 25 percent tariffs on steel, even if steel were to

rise 25 percent. It's not a significant bump up in things like automobile prices, but the ripples from it as your last interview was discussing. The

ripples from that are seismic and it is just not a good thing for any economy. One of the things -- go ahead.

QUEST: So, why does the market disbelieve? Here in the studio we've just been sort of talking about that. And there are those who say, well the

President has a history of promising and not delivering or the President, you know, and -- but it would be very difficult for him without getting

something back in return, not to turn out with tariffs next week.

IACCINO: I don't know, he makes these sort of macho proclamations, mostly on Twitter. And then he'll sit in a room with one of his officials whether

it's commerce secretary or whether it's treasury secretary, it doesn't really matter, he makes these proclamations and then they just don't

progress. Now I agree with you. This one is a little bit different because of the reaction. Don't tell me Mario Draghi's not going to mention

it in the ECB press conference this week. He's going to be asked about it probably first, second and last. But I just think that with this

particular type of an instance with the other countries already talking about specific retaliation, he's going to back off it by saying he got

something and he doesn't ever really think he has to prove it.

QUEST: Bob, have a good weekend. It's been an extraordinary week. As we continue tonight, Mexico's economy minister exclusively on QUEST MEANS

BUSINESS after the break.

(COMMERCIAL BREAK)

QUEST: Theresa May is offering much-needed clarity some say on Brexit. The praise is coming from Europe's top Brexit negotiator and the Prime

Minister's frequent critic, Michel Barnier. The British Prime Minister's Brexit speech aimed to calm both the pro-Brexit and pro-European elements

of the party. She told Euroskeptics they' d have to face some hard facts. One, European court rulings would continue to affect us. Two, the pro-

Europeans conceded access to each other's markets will be less than is now, and three, crucially, neither can get exactly what they want.

(BEGIN VIDEO CLIP)

THERESA MAY, BRITISH PRIME MINISTER: So, my message to our friends in Europe is clear. We know what we want. We understand your principles. We

have a shared interest in getting this right so let's get on with it.

(END VIDEO CLIP)

[16:20:00] QUEST: Bianca is with me in London. Did she do when she needed to do?

BIANCA NOBILO, CNN LONDON: She made a very good attempt which is being broadly well received in the U.K., of course, not by everybody. But she

has managed to get praise from the DUP, from the Brexiteers, from remainers in her own cabinet who tend to be on both sides of this. And obviously,

Michel Barnier was happy. But Guy Verhofstadt, the representative for the European Parliament, said it's still too vague and we need more details

than this.

QUEST: OK, we know the devils in the detail. Bianca, how does she square the circle of wanting frictionless trade whilst ruling out customs union

and single market? How do you do that unless the Europeans, the EU is prepared give ground on the four freedoms?

NOBILO: Exactly, so MEPs have been saying today that the Prime Minister needs to compromise more if she wants to come to an agreement. But the

tone from the Prime Minister today in her speech was that the EU also needs to come to the table with some compromises. She mentioned the fact that

the EU had accused her of cherry picking in these negotiations. That she said that any free trade deal was then cherry picking by that definition.

She proposed a couple of solutions today that we hadn't seen before. But they also require the EU to do quite a lot of leg work. So, how far

they'll go we don't know, but it is the detail that the EU have been asking for some time. And like Donald Tusk said when he visited Theresa May

earlier this week at Downing Street. I don't like your red lines and I'm not happy with them, but he's pleased to have heard them. So, at least the

substantive discussions can properly begin. So, we don't have all the details yet, but the talks again to resume next week in Brussels. So, I

think with this speech it certainly puts them in a better place to move forward and make some tangible decisions.

QUEST: Northern Ireland, now we know that the draft document this week is a non-starter of some sort of common area that keeps Northern Ireland. But

there is still no obvious solution to an open border that still maintains the integrity of both a single market and the United Kingdom.

NOBILO: There isn't, and in fact, Leo Varadkar, the leader of the Republic of Ireland was one of those today who coolly received the speech. He said

we do need more clarity on this. Obviously, he still has many concerns about the impact it's going to have, and everybody involved in this process

wants to avoid a hard border in Northern Ireland at all costs. Today when the Prime Minister was asked in the Q&A after the speech about Northern

Ireland, she said they would avoid a hard border at all costs but ignored the other parts of the questions which referred to technological borders

and borders of some sort. That's really is what the U.K. is pushing these technological solutions and others, but that remains the biggest sticking

point in all of this -- Richard.

QUEST: Bianca, have a good weekend Bianca. We've got to read and get up on for next week.

A corruption investigation has quite literally arrived on the Israeli Prime Minister's doorsteps. Investigators have questioned Benjamin Netanyahu

under caution. It's known as a case 4,000. He faced questions at his home in Jerusalem for five hours on Friday morning. Our correspondent in

Jerusalem is Oren Liebermann. We know he's been questioned on multiple occasions, is the difference this time it was under caution?

OREN LIEBERMANN, CNN CORRESPONDENT: No, he's been questioned under caution before. The term under caution indicates that he's been questioned as a

suspect. But there's a big difference this time because investigation has moved into his phase. The previous seven time he's been questioned were

all about case 1,000 and 2,000 in which he's been named as a suspect. Police say they have enough evidence to indict. This is about case 4,000

which is a much bigger case and that's why this is a big deal. But he's effectively been questioned as a suspect in this case. This is a whole new

phase here. It's new pressure on the Prime Minister, political and public.

QUEST: What's the difference between 1,000 and 2,000 and the magnitude of 4,000. What's in 4,000s? What makes it such an important case?

LIEBERMANN: First, the number of suspects. We are talking about outside of the Netanyahu's, nine different suspects in this case, including some

very big players including Israeli businessmen, Netanyahu's confidants as well as the right-hand man of an Israeli telecom firm controlling

shareholder, Bezeq, a very big company here. And it's the scope of it. How many people are involved in the scale of it here. Prosecutors saying

Netanyahu gave Israeli telecommunications from Bezeq and its controlling shareholders regulatory favors worth up to a billion shekels in exchange

for favorable news coverage.

QUEST: The Prime Minister denies all of this, of course. Is he saying it is a political witch hunt?

LIEBERMANN: Absolutely. He's using very much the language we're hearing from President Donald Trump in denouncing the investigations a media fueled

political witch hunt.

[16:25:00] He accuses the left, the opposition of not being able to beat him in elections, so they say this is how he's going about doing it. And

he's attacked the opposition, the left, police, the attorney general's office, prosecutors, he's attacked everyone basically, but his own

coalition in decrying the investigation.

QUEST: Oren Liebermann who is in Jerusalem tonight, thank you for staying up late tonight for us.

When we come back we will have Mexico's economy minister. We need to talk obviously about steel tariffs and trade and the likely effect on NAFTA

where negotiations are already in deep trouble. That's after the break. It's QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello. I'm Richard Quest. There is more QUEST MEANS BUSINESS in a moment when I'll speak to one of Donald Trump's economic advisers as the

White House digs in for a trade war. And Steve Bannon shows up in Italy as Euroskeptic parties plot victory in this week's election.

And as we continue tonight, you are, of course, with CNN and on this network, the facts always come first.

The European commission president Jean-Claude Juncker has identified potential targets for retaliation against planned U.S. tariffs. They're

including Harley-Davidson motorcycles, bourbon whiskey and Levi Jeans. President Trump has said that he would impose import taxes on steel and

aluminum.

Terrorist attacks in West African nation of Burkina Faso on Friday have left more than a dozen people dead. A government source is saying that six

attackers and seven security officers were killed when heavily armed men attacked the French embassy and the country's military headquarters. The

French authorities have launched an investigation.

A storm that meteorologists are calling a bomb cyclone is causing air travel chaos in the eastern United States. So far, more than 2,500 flights

have been cancelled. New York's JFK says flights are departing and arriving there only on an unlimited basis.

Kensington palace in London have announced that Prince Harry and Meghan Markle plan to invite more than 2,000 members of the British public to

share in the celebration of their wedding day. They'll be able to enter the grounds at Windsor Castle. They'll watch the arrivals of the bride,

the groom and their guests.

[16:30:00] So, tariffs, trade and wars. America's biggest trading partners are planning their response to Donald Trump's plans for steel tariffs.

Joining me now exclusively is Mexico's economy secretary, Ildefonso Guajardo. He joins me now. Minister, thank you, sir. We need to now

understand what will -- Mexico is one of the largest exporters of steel to the United States. Will you get an exemption from the tariffs that the

U.S. president is imposing, do you know?

ILDEFONSO GUAJARDO, MEXICAN ECONOMY SECRETARY: Well, it may come as a surprise to you, but we are a country that's the second most important

buyer of U.S. steel and we are the first buyer of U.S. aluminum. So, in a way, we have a trade deficit with the U.S. of $2 billion. The North

American steel industry is highly integrated. So, anything that will distort that integration will not be good news for North America and

definitely will make our industries less efficient in terms of competition.

So, in a way, we are sending a clear message. I was in Washington a couple of days ago, and I had a meeting with my colleague Wilbur Ross, and I

explained to him that any measure that would not exclude the North American partners, will have tremendous consequence on how we are integrated.

QUEST: What will you do to retaliate? The Europeans have already symbolically chosen bourbon, Levi's and similar, and what would you do to

retaliate if you are caught up in these tariffs?

GUAJARDO: Richard, as you know, what we hear from President Trump was an announcement. I think that it's not the first time that there is some

thinking about measures that are going to be definitely taken. We have to wait to see what is going to be the final outcome of this action. Once

that is clear in black and white then we will do our planning in terms of how we will react to that decision.

QUEST: But you would agree that tonight people are -- ministers, trade executives, the markets, people are talking about the start of a potential

trade war.

GUAJARDO: It is clear that when you are taking a measure all over your partners around the world, the idea is how to deal with steel excess

capacity. Most of our countries are members of the global firm on this excess capacity that is being discussed at the OECD. And in that forum,

you have to take the right actions to really contain that excess capacity and you have to target where the problem is. By taking a measure that is

hitting everybody is like trying to kill ants with a rifle. You have to be precise on what you want to do.

QUEST: On that precision, let's take, for example, the U.S. President has said again and again, he wants to target China and Chinese steel.

Irrelevant of the fact that not a lot of Chinese steel actually gets imported to the U.S., but if that's the case and there's further dumping of

Chinese steel elsewhere in the world, that's one way in which this bad situation becomes much worse. You are well aware of the way in which it is

also interconnected.

GUAJARDO: Well, definitely. One of the elements that we share in our discussions in these North American dialogue is that Mexico has prevented

two years ago with very specific actions to prevent the Mexican steel market to be inundated by excess capacity from Asia. So, we have taken

measures and specific measures that have been proven effective. That's why we are purchasers in the North American market or we are trading in the

American market had increased.

QUEST: The visit to Washington of your President, it was already put off once. It's now by the President's decision, he can see no purpose in

having a visit, bearing in mind the rhetoric on the wall and similar. Relations at the top level between Mexico and the United States sound as if

they are the worst they have been in decades.

GUAJARDO: Let me explain, there are two tracks to this dialogue. We have been extremely effective in building an agenda that includes many different

items. The first ministry is in charge of putting all of this together and at the ministerial level and the cabinet level we have a very open

dialogue, a constructive dialogue. It is obvious that before we can plan a presidential visit, all of the elements of this agenda have to be in the

right place. And we have to be very precise of what objectives once we are ready to arrange any visits.

QUEST: How concerned are you now with NAFTA that we are into the final series of negotiations? Do you see room for an agreement on the

modernization or are you going to fail on issues of points of origin, margins, and all -- and the sunset clause?

GUAJARDO: Well, let me share with you, Richard, that as we speak our teams are meeting since last Sunday. This is the seventh round. We're hosting

in Mexico City and I'll be waiting on Monday for the visit of the Ambassador Lighthizer and Minister Freeland, Chrystia Freeland from Canada.

Already our teams have been telling us of basically closing at least three to four charters within these seventh round of negotiations. Most of them

accumulate into the need to modernize the NAFTA has been in place for the last 22 years. Now our target for this ministerial is trying to engage in

the more complex issues like the ones that you were referring to like the rule of content for the automobile industry, like the sunset clause, like

all the mechanisms that have to do with the ambitious, and how you decide in different elements. And those are very complex issues, but I do see

that there are possibilities to land this agreement in a way that can be a win-win-win for the three countries.

QUEST: All right, let me push you, finally minister, if I may. It's a Friday. Let's have a go at this. Minister, you say you see possibility,

but are you optimistic that the possibilities can come to fruition? And how long are you going to give it before you finally say, this is a waste

of time, let's go home?

GUAJARDO: Well, first of all, I have shared this with you when we were in the middle of two meters of snow in Davos. As a negotiator you never use

the word optimistic. We use the word constructively engaged and positive. That is the word I used, and I think that relative to your question about

time, I think that we have to concentrate on the quality of the agreement. Regardless of political calendars. Regardless of any transition in

government. We negotiate on behalf of the Mexican people and the Mexican state and we have to guarantee that whatever is the end result is good for

us.

QUEST: Minister, constructive engagement right the way through. Thank you for constructively engaging with me tonight on QUEST MEANS BUSINESS. We

much appreciated as always, sir.

Donald Trump words reverberated through international markets and there was a knock-on effect in Europe. Stocks -- you have to understand, of course,

when you look at these numbers, there are two factors going on here. Firstly, they've seen the worst of what was happening in the U.S. market

for the day and secondly, big steelmakers in France and Germany were absolutely creamed and that's why you have the Xetra Dax off 2.25 and CAC

off a 2 1/3.

Let's stay in Europe. Italy is battling a flagging economy and high levels of unemployment. The country goes to the polls this Sunday and there's

something causing panic among veteran politicians. The populist anti-EU five-star movement led by Luigi Di Maio. A poll suggested it could end up

as the largest party. Silvio Berlusconi is hoping to put together a coalition of center right parties to stop that from happening.

Lorenzo Codogno is a former chief economist in the Italian Ministry of finance and the economy. He joins me from London. Sir, this is the final

moment. Look, you've had pretty much a technocrat government that's held things together. That hasn't, you know, do no harm seems to be the moral

and the mantra of the Gentiloni government. Now the electorate get a choice, what's your big concern?

LORENZO CODOGNO, FORMER CHIEF ECONOMIST, ITALIAN ECONOMY MINISTRY: Well, the electorate is split into three groups basically. So, it's difficult to

get an outright majority and the center right is the only coalition and party that can actually get an outright majority. My concern is that it

will be difficult to find a solution and to form a government and therefore there will be uncertainty.

QUEST: If a government is not easily formed, how do you think it plays out? I mean, who does take the Prime Minister? Obviously, the president

has to at some point ask somebody to form a government.

CODOGNO: Well, as I said before, clearly, the center-right has a chance to win. I would put 30 percent probability. If that happens, that is easy,

OK. They can form a government and they can decide for the prime minister.

[16:40:00] If that doesn't happen, there will be hung Parliament. The president will become kingmaker. There will be a negotiation. Probably it

will take a while to get the solution. I think the baseline solution would be a kind of mainstream grand coalition between the P.D. So, the moderate

center left and for the modern center right.

QUEST: Is there the will for that grand central coalition? Let's just take the German example at the moment. It took Angela Merkel, the better

part of a year to form her grand coalition and that was after pretty much everything else had been exhausted. But you then look at, for example,

what happened in it, in France with Emmanuel Macron. And I am left wondering not so much on the individual politics, what is it the Italian

people want for their role in the European Union in the future?

CODOGNO: I think Italians are fed up with the current situation. They want change and they want to protest. Keep in mind that now Italy is

growing, but GDP is still almost 6 percentage points below the pre-crisis levels. So, I think people want change and they tend to move to the

extremes. That's a risk.

QUEST: But the problem is people have wanted change in Italy for as long as I can remember. There have been numerous elections and there was a

constitution that was brought to the people, that spectacularly blew up in the face of the then prime minister. So, one's left wondering at what

point does Italy end up with its own Donald Trump, which it had once before with Silvio Berlusconi or with the policy of Brexiteers similarly in tune.

CODOGNO: I think the big risk is that Italy ends up with an anti-Euro, anti-establishment government. However, I think the risk for that option

is pretty slim. What is more likely is that Italy doesn't get a really get enough of majority needed until after the election. So, there will be some

uncertainty.

QUEST: Good to see you, sir. Have a good weekend. Good luck with the elections this weekend.

CODOGNO: Thank you.

QUEST: As we continue, Donald Trump reportedly defied some of his own staff by announcing trade tariffs. One of the president's former economic

advisors next to discuss that.

(COMMERCIAL BREAK)

QUEST: It would be entirely appropriate to say everyone is aghast with Donald Trump's tariffs plan. The chief executive of Century Aluminum was

in the room when Trump made the announcement on Thursday. Earlier Michael Bless told Maggie Lake that tariffs were long overdue.

(BEGIN VIDEO CLIP)

[16:45:00] MICHAEL BLESS, CEO, CENTURY ALUMINUM: This is a move that was a long time in coming. You know the data here. What's happened over the

last ten years is that the state supported actors both in China and in other regions of the world. China gets a lot of press here and a lot of

attention, but the problem is prevalent in other regions of the world in which state actors own the primary aluminum industry. They've created

industries out of nothing. They've created excess production that's not needed in their own economies with the express intent, it's pretty

straightforward, of moving that here and it's just devastated that industry. We are down 70 percent in production. Thousands of jobs in the

last couple of years alone. The price was destroyed beginning a couple of years ago and so, all we think this is doing is correcting those abuses and

making the environment such that those abuses shouldn't be able to continue anymore. We compete on a level playing field which we're happy to do and

look forward to doing.

(END VIDEO CLIP)

QUEST: We've learned that Donald Trump spoke about his tariff plan with the House Speaker Paul Ryan on Thursday. Stephen Moore is a former

economic adviser to the Trump campaign and joins me from the warm tones of Sarasota, Florida, while the rest of us are all freezing our bits off in

the north and do not expect sympathy or quarter from us tonight, Stephen.

STEPHEN MOORE, CNN ECONOMIC ANALYST: I don't feel one bit sorry for you, Richard.

QUEST: Now, look. There's just about agreement from anybody who is a trade expert that not only was this back handed in the way it was

announced, but that the tariffs, per se, are a bad idea. Do you agree?

MOORE: I think the tariffs are a pretty bad idea. I'm a free trade guy. Look, I do think Trump makes a point about China. Earlier on your show

someone was quoted as saying China wants free and fair trade. Well, I'm not so sure China does. But that's a separate issue how we deal with

China. I think when it comes to something like steel or something like aluminum which is an input in everything we produce, Richard, one of the

points I used to make with then-candidate Donald Trump is look, if we make the steel aluminum more expensive, then the 5 million Americans that we

employ in other manufacturing jobs that use steel and aluminum, you know, their jobs are going to be in jeopardy because they're going to have a

harder time competing on the global market. So, I think this is misguided. I do think Donald Trump's heart is in the right place. Richard, I do think

he really cares about those steel workers in places like Pennsylvania and Ohio who have lost jobs. I think he cares about the aluminum workers. I

just don't think this is the right way to protect their jobs.

QUEST: Right, we're already hearing tonight -- you heard the European Union talk about Harley-Davidson, Levi's and bourbon. One assumes that the

Chinese won't be far behind with soybeans and technology. What needs to happen now?

Let's look forward. What needs to happen now to prevent the tariffs tit for tat, and a deteriorating situation that gets out of hand before anybody

realizes it?

MOORE: You know, what I worry most about -- assuming these tariffs stay in place and I still kind of got my fingers crossed that reason may prevail

here and they may back off from this or maybe it will just be a temporary thing. Or maybe it will be just a few countries. I mean, I think as you

said earlier on the show, the United States gets the leading country that we get steel from is not China as what Americans think, but it's Canada,

and I don't think we have any foreign policy issues with Canada, and I don't think we have to worry about our domestic supply of steel when we get

so much of it from Canada and Mexico.

Where do we go from here? My biggest worry is what happens with NAFTA. Because NAFTA is still being renegotiated. I think it would be a disaster,

Richard, for the whole North American continent, for Mexico, Canada and the United States as we compete against Europe and Asia not to be a unified

continent. It was Ronald Reagan's vision. It was signed into law by Bill Clinton. It's been bipartisan policy for a long time and so, I'm worried

about that. Because you know, you just talked to the Mexican minister, you know, Canada is now saying they may retaliate against the United States.

This is not a good environment to be renegotiating NAFTA in.

QUEST: Good to see you, Stephen. Thank you for taking time to talk to us.

MOORE: I wish I had better news.

QUEST: Well, you've got the nice weather and next time you're up in the northeast we'll have you here to talk with us. Good to see you, sir.

MOORE: OK, stay warm.

QUEST: And you. Well, you already will, you'll be in Florida.

Even ignoring the international backlash to President Trump's tariffs, and it's been a wild week at the White House. Now the Trump family business

deals are under investigation. We'll talk about that after the break.

[16:50:00] (COMMERCIAL BREAK)

QUEST: The tariff announcement may have turned the world economics on its head and politics in Washington was one more tumultuous moment in a

dizzying week. CNN's Chris Cillizza is in Washington. What's your understanding Chris, within the White House of who was in favor of these

tariffs and who was not?

CHRIS CILLIZZA, CNN POLITICS EDITOR AT LARGE: Well, you know, Richard, I don't know that they had that much of a discussion on them because so of

them were surprise by this. This seems like a Donald Trump project which candidly, a lot of things that Donald Trump announces catch many of his

senior officials by surprise, and I think this was one of them. You heard Stephen Moore who just on your show who's usually very -- was a big in

favor of the tax cut, very on Trump's side in terms of economics say it's a bad idea. Virtually any Republican Senator who said anything, said this is

a terrible idea and it amounts to a tax cut. This is out of the protectionist Steve Bannon sort of wing of thought and he's not around

anymore and there are not many representatives who think like him still left in the White House.

QUEST: There is a story tonight, one of Donald Trump's friends, advisers, confidants, Carl Icahn allegedly sold $31 million worth of stock in a

company and that stood to be hit by the steel tariffs. It makes cranes and the like.

CILLIZZA: Yes.

QUEST: Nothing's been confirmed. Nothing's been denied, but it sounds, you know, this is a smoke without fire at the moment.

CILLIZZA: I feel there is a lot of that with Donald Trump and the people who surround him, but look, that company's stock has gone down a double-

digit percent since the tariff announcement. Are there coincidences, absolutely. You know, there are. The question is Donald Trump and his

daughter, his son-in-law, his sons, there's just a lot of complexity in financial relationships here that raises these sorts of questions of when

did they -- what did they know and when did they know it -- speaking of Carl Icahn.

QUEST: Relating to that, I found one of the most fascinating business Trump political stories, this idea that the Kushner empire got loans from

companies who had either been involved with or advised or visited Jared Kushner at the White House. Now again, there is smoke, but I can't see the

fire.

CILLIZZA: That's right. And I think that's a correct assessment. One of the companies Apollo, a $500 million loan for Jared Kushner's family after

they came to the White House and visited. Now again, you can come and talk to a senior adviser to the president of the United States who is also his

son-in-law, and then separately and apart decide that you want to help financially with his family's company. It's just the appearance. This is

the same thing of having your daughter also be a senior adviser to your presidency. It's just, where are the lines? Where do you draw the lines?

They are very fuzzy and that lends for just the kind of questions we're talking about.

QUEST: What I find frustrating in this, Chris, is that this is -- we are not being clever after the event. We are not being critics in the armchair

when the game's over. At the time he took office, and the conflict of interest provisions were put in place, people said, experts said this is

the sort of thing that is going to happen.

CILLIZZA: By the way, one of the reasons that Jared Kushner doesn't still have a permanent security clearance is because of the financial dealings he

was making during the presidential transition. So, this is not new, either and some of these allegations are new. But this happening is not new.

[16:55:00] Donald Trump did not put his whole world into a blind trust. He said, nah it's fine. Don Junior is running it. That's why people do this,

and I would note Donald Trump is the person elected to -- certainly in the modern era, elected with the most complex personal and business financial

background we've ever had.

QUEST: Was this week a significant week in Trump world?

CILLIZZA: I honestly think the biggest thing for him, Richard, was losing Hope Hicks, the communications director. Because it's someone he listens

to, someone who is loyal to him. Someone he trusts. All of this other stuff including the Russia investigation I think have a longer arc problem

for him. But in the near-term he feels as though he's under fire and he doesn't have enough allies who he trusts to defend him.

QUEST: Try to have a restful weekend, Chris Cillizza.

CILLIZZA: Oh, I surely won't.

QUEST: Before we jump back in again on Monday. Good to see you, sir, thank you.

CILLIZZA: Thank you, my friend.

QUEST: And we'll have a Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Our decision tonight to get out the war map and in the war room, was not taken lightly. Tonight's Profitable Moment, it was the president

himself who says trade wars are good, and just about everyone who has spoken since have talked in terms of we must avoid a trade war. We must

avoid these products being tariffed. We must ensure the freedom of trade across the oceans. So, it's not us that are using this phrase trade war.

The reality is that at the moment, yes, Pascal Lamy says they say it's over spoken. But you heard the Mexican economy minister talk about the terrible

consequences if this situation gets worse.

You and I can question whether Donald Trump will actually impose those steel tariffs that he's threatened. Many say it won't happen, but until it

doesn't, the reality is the weapons are being unfurled and the battle is about to commence. Now that is QUEST MEANS BUSINESS for tonight. I am

Richard Quest in New York. Whatever you're up to in the hours ahead I hope it's profitable. I am away next week.

END